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Subject News *  Documentary evidence dominates probe, further custody unwarranted: mumbai court grants bail in Rs. 22.44 crore customs duty evasion case. *  Business premises can’t remain sealed for non-participation in GST search: Allahabad High Court. *  GST pre-deposit must be refunded proportionately when taxpayer partly succeeds in appeal: Bombay High Court. *  Supreme Court grants 30 days to file GST appeal; keeps pre-deposit issue open due to deposit in parallel CGST proceedings. *  GST demand can’t exceed amount proposed in SCN: Allahabad High Court quashes Rs. 20.47 Crore order. *  Hundreds-of-crores GST demand and heavy 10% pre-deposit no ground to bypass statutory appeal: Punjab & Haryana High Court. *  Delhi High Court refuses to entertain challenge to gold confiscation due to statutory appeal remedy and unexplained delay. *  Procedural error in customs broker licence inquiry can be rectified through remand: Delhi High Court. *  GSTR-2A mismatch alone can’t justify ITC denial without invoice-wise verification; personal hearing mandatory: GSTAT. *  GST order passed without uploading personal hearing notices violates sec. 75(4): Allahabad High Court. *  TAX EVASION - Sec. 74 GST SCN quashed for not spelling out fraud, wilful misstatement or suppression: Allahabad High Court. *  STPI’s SOFTEX certification and NoC charges taxable as business support services: CESTAT. *  Suspicion can’t replace proof: CESTAT quashes penalty in alleged gold-smuggling operation. *   Limitation runs from communication of order: Madras High Court upholds rejection of delayed GST Appeals. *  Rajasthan High Court quashes GST demand over unsigned show cause notice. *  ITC recovery upheld where supplier failed to deposit GST: Rajasthan High Court. *  Customs commissioner’s empowered to make port trust liable for duty on pilfered goods: Supreme Court. *  Rectification proceedings can’t be used to challenge an uncontested GST assessment through a writ petition: Andhra Pradesh HC. *  GST proceedings against deceased proprietor unsustainable without notice to legal heir: GSTAT. *  Mere availment of ineligible self-assessed ITC doesn’t amount to suppression without evidence of fraud or wilful misstatement: GSTAT. *  Disposal of mining overburden by entity authorised by mining lease holder constitutes taxable service: CESTAT. *  Toll plaza data not mandatory for ITC refund: GSTAT. *  Disputed GST fraud allegations require investigation: Punjab and Haryana High Court makes interim bail absolute in alleged fraud and GST fraud case. *  Non-manufacturer contractor liable to deposit excess excise duty collected from buyer: CESTAT. *  GST order can’t reject taxpayer’s reply as “not satisfactory” without reasons: Madhya Pradesh High Court. *  Uncorroborated statements can’t establish alleged diversion of duty-free goods: CESTAT. *  Erection services were not liable to service tax prior to 10th september 2004: CESTAT. *  Sec. 74 GST notice must spell out statutory ingredients for invoking extended tax demand proceedings: Allahabad High Court. *  No jurisdictional bar under section 6(2)(b) in parallel CGST SGST proceedings: Delhi High Court refuses to bypass GST appeal remedy. *  Madras High Court remits GST demand for fresh adjudication after taxpayer claims it was unaware of SCN following business closure.  

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PJ/CASE LAW/2014-15/2308

Whether proprietor’s accident is reasonable cause for waiving penalties?

Case:-M/s TARACHANDRA ENGINEERING PVT LTD Vs COMMISSIONER OF CENTRAL EXCISE, VADODARA-I
 
Citation:-2014-TIOL-1646-CESTAT-AHM

Brief facts:-The appellant is engaged in providing taxable service falling under the category of Erection, Commissioning or Installation services. In addition, the appellant is also engaged in rendering taxable services under the category of Management, Maintenance & Repair services as defined under Section 65 (108)(zzg) of Finance Act, 1994. The appellant failed to get the later category of service registered with the Department and also belatedly filed ST-3 returns for the period October 2007 to March 2008 on 17.07,2008. Appellant on their own paid the Service Tax of Rs. 2,75,365/- along with interest of Rs. 60,477/-. On receipt of ST-3 returns, Revenue issued a show cause notice for penal action and penalties under Section 77 & 78 of Finance Act, 1994 were imposed upon the appellant. In the appeal filed before the first appellate authority, penalties imposed under Section 77 & 78 of Finance Act, 1994 were upheld. Aggrieved by the Order-in-Appeal dt.19.12.2011/20.02.2011, passed by first appellate authority, appellant has filed this appeal.
 
Appellant’s contentions:-Shri Dhaval K. Shah (Adv.) appearing on behalf of the appellant argued that there was a delay in filing ST-3 returns and payment of Service Tax due to accident of proprietor and also due to financial difficulties faced by the appellant. It was his case that entire penal proceedings of issue of show cause notice started only after the appellant filed the required ST-3 returns with the Department and also paid the entire Service Tax along with interest before the issue of show cause notice. It was his case that as there was a reasonable cause for delay in filing the returns and payment of Service Tax, therefore, their case is covered by the provisions to Section 80 of Finance Act, 1994. He relied upon the judgment of CESTAT Delhi in the case of CST New Delhi Vs Competent Automobiles Co. Ltd [2011 (29) STR 561 (Tri-Del)]. It was emphasized that in the case of CST New Delhi Vs Competent Automobiles Co. Ltd. even the detection was done by the Revenue and only after detection, appellant in that case paid the Service Tax immediately. That inspite of this fact, it was held by Delhi CESTAT that penalty under Section 78 is not imposable as per Section 80 of Finance Act, 1994.
 
Respondent’s contentions:-Shri J. Nair (A.R.) appearing on behalf of the Revenue argued that penalty has been correctly imposed upon the appellant by the lower authorities in view of CESTAT Chennai Bench judgment in the case of Jupiter Sea & Air Services Vs CCE Chennai-I [2006 (3) STR 704 (Tri-Che.)] = 2005-TIOL-806-CESTAT-MAD.
 
Reasoning of judgment:-In the present appeal, the appellant paid the entire Service Tax along with interest and intimated the same in the ST-3 returns belatedly filed with the Revenue. The reason given for late payment of Service Tax was accident of their proprietor and also the financial difficulties faced by the appellant. Ld.A.R. relied upon the judgment in the case of Jupiter Sea & Air Services Vs CCE Chennai-I(supra) to support his case that penalties are imposable upon the appellant. However, it is observed that the judgment passed by CESTAT Chennai was a single member judgment whereas the judgment passed by CESTAT Delhi in the case of CST New Delhi Vs Competent Automobiles. Co. Ltd (supra) is a two member judgment delivered in 2011. In the present appeal, the appellant himself paid the entire Service Tax and interest before issue of show cause notice and also intimated the Department by way of filing the required ST-3 returns, though belatedly. The short payment of Service Tax was not detected by the Revenue, therefore, the reasonable cause explained by the advocate, on account of an accident of the proprietor of the appellant and their financial difficulties are justifiable reasons for the purpose of Section 80 of Finance Act, 1994. Accordingly, it is held that no penalty under Section 78 of the Finance Act, 1994 is imposable upon the appellant by virtue of proviso of Section 80 of Finance Act, 1994. In view of the above observations, the appeal filed by the appellant is allowed by extending the benefit of Section 80 of the Finance Act, 1994.
 
Decision:- Appeal allowed.

Comment:-The analogy drawn from the case is that if the appellant pays the service tax along with interest suo motto and also files ST-3 returns belatedly, and the reason for delayed payment of service tax and delay in filing of returns is reasonable, penalties imposed may be waived by invoking the provisions of section 80 of the Finance Act, 1994.

Prepared by:- Monika Tak
 

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